Local Media and the Local Housing Market

46 Pages Posted: 13 Oct 2016 Last revised: 31 Jan 2017

See all articles by Yeon Sik Eric Cho

Yeon Sik Eric Cho

University of California, Los Angeles (UCLA) - Finance Area, Students

Date Written: October 12, 2016

Abstract

The residential housing market is dominated by households who are often inefficient at processing information. This paper presents evidence consistent with media playing an information provisional role, and thereby affecting short-term house price dynamics. Firstly, through county-level panel time-series regression using data from 269 counties and newspaper articles as a proxy for the media, I find that counties with increase in housing related articles experience 7 to 10 annualized bp higher housing returns than other counties 4 to 6 months afterwards. This effect is persistent throughout the whole sample except during the housing crisis when there were higher than average amount of negative housing news. The increase in housing return is reversed in 10 to 12 months. Secondly, using Google Trends data as a proxy for households' home-owning interest, I show through FOMC meeting dates as an instrumental variable that media causally affects households' home-buying interest.

Keywords: Short-term House Price Movement, Media, Information

JEL Classification: D10, G11

Suggested Citation

Cho, Yeon Sik Eric, Local Media and the Local Housing Market (October 12, 2016). Available at SSRN: https://ssrn.com/abstract=2851540 or http://dx.doi.org/10.2139/ssrn.2851540

Yeon Sik Eric Cho (Contact Author)

University of California, Los Angeles (UCLA) - Finance Area, Students ( email )

Los Angeles, CA
United States

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